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Gold and Silver Prices Outlook for October 29 – November 2

October 28, 2012

The recent FOMC meeting didn’t seem to affect much the prices of gold and silver during last week, as the FOMC left its monetary policy unchanged. On a weekly scale, both gold and silver edged down. Several U.S reports may have slightly affected precious metals rates during last week: during the third quarter, the U.S GDP rose by 2%, – this growth rate was slightly higher than many had anticipated; the U.S new home sales rose again during September; jobless claims fell by 23k to reach 369k;. During the previous week, the Euro/USD declined by 0.65%; on the other hand, the Aussie dollar depreciated against the USD by 0.41%. This mixed trend may have contributed to the low movement of bullion rates. The main events of the week will include the non-farm payroll report, BOJ monetary policy statement and U.S manufacturing and factory orders reports.

Here is a short outlook for October 29th to November 2nd; this includes a fundamental analysis of the main publications and events that may affect precious metals markets such as: BOJ meeting, U.S non-farm payroll report, U.S manufacturing PMI, Canada’s GDP, China’s manufacturing PMI, U.S factory orders, ECB President Speech, and U.S. jobless claims.

The price of gold decreased during last week by 0.7%; further, during said time the average rate reached $1,712.44 /t. oz which is also 1.65% below the previous week’s average. Gold finished at $1,711.9 /t. oz.

Silver also edged down by 0.19%; further, the average rate decreased by 2.51% to reach $31.96/t oz compared to the previous week’s average $32.78/t oz.

The Euro decreased against the U.S dollar by 0.65% (on a weekly scale); conversely, several “risk” currencies such as the Australian dollar appreciated against the U.S dollar by 0.41%. Perhaps the mixed trend of the Euro and Australian dollar may have contributed to the low volatility in precious metals rates. The correlation between the Euro/USD and precious metals remains mid-strong and positive: during October the correlation between Euro/USD and gold reached 0.54 and between AUD/USD and gold the correlation was 0.43. Thus, if the Euro and other “risk” will continue to fall during the upcoming week, this may pull down gold and silver.

In the video below there is a broad overview of the main publications, speeches and events that may affect gold and silver prices between October 29th and November 2nd. These include the above-mentioned news items such as: non-farm payroll report, U.S manufacturing PMI, U.S factory orders, China’s manufacturing PMI, BOJ monetary policy statement, and U.S. jobless claims (just to name a few).

In conclusion, I guess gold and silver will resume their downward trend during the week. The ongoing concerns regarding the debt crisis in Spain and Greece could keep the Euro weak, which, in turn may also adversely affect the prices of gold and silver. The upcoming reports regarding the U.S economy include the U.S non-farm payroll report, manufacturing PMI and factory orders could pull anticipated pace. In particular, if the U.S non-farm payroll report will present a growth of at least 110k jobs, this could lower the odds of the FOMC intervening again in the market in the near future. This, in turn, could pull down the prices of gold and silver. If China’s manufacturing PMI report won’t pass the 50 point mark, it will mean China’s manufacturing sector isn’t expanding and could adversely affect commodities prices. The continuous depreciation of the Indian Rupee may also curb the growth in demand for gold in India, among the leading consumers of gold. In any case, I suspect the low volatility in the precious metals market will continue. Finally, if the Euro, Aussie dollar, Canadian dollar and other exchange rates will continue to decline against the USD, this could also adversely affect bullion.